Immigration is “a good thing”, and that is all we need to know

I’ve been struck again over the last few days by the determination of our “elites” – whether from the left-liberal end of the spectrum, or the (rather smaller) libertarian end – not to actually engage with the data on New Zealand’s experience of large scale immigration.

In their amusing tongue-in-cheek simplified retelling of English history, 1066 and all that, Sellars and Yeatman had most things classified as “a good thing” or “not a good thing”.

There seems to be a world view, straddling National, Labour and the Greens, and ACT as well, that in some sense “immigration is a ‘good thing'” and that is really all that needs to be said on the matter. Much the same goes for the media. The plebs just need to get with the programme – perhaps having it explained to them again, slowly and clearly this time, that immigration is a “good thing”. Any skepticism is too often deemed to reveal more about the character of the sceptic, than the merits of the economic case.

There is a respectable theoretical argument (at least within the narrow confines of economics) to be made for an open borders policy. But the fact that no political party I’m aware of – here or abroad – actually argues for such a policy is probably quite telling. Within the EU, there is a particularly respectable case for open borders – the EU-enthusiasts see the countries of Europe as being on a transition to a political union. Only brutal authoritarian countries – think China – want to control migration of citizens within their own country. But, as it happens, most Brits didn’t want to be part of an EU political union, preferring to govern themselves. Polls suggest citizens in most other EU countries also don’t want such a union.

Even without political union, there can be a reasonable case for an easy flow of people across borders. New Zealand and Australia are two different countries, and that doesn’t seem likely to change. And yet there have never been direct immigration restrictions on people moving among the various colonies (pre 1901) or between the Commonwealth of Australia and New Zealand (since then). In practical terms, the barriers to moving – especially from New Zealand to Australia – have been getting higher in the last few decades, as Australian welfare provisions etc and citizenship have become progressively less readily available to New Zealanders. On my reckoning, New Zealanders have gained considerably from this ability to move to Australia, especially as the large income and productivity gaps have opened up in the last 50 years. Some New Zealanders relocated and took direct advantage of the higher incomes and better opportunities abroad. The rest of us benefited – at least in principle – because the departures from this land of (apparently) diminished opportunities eased the pressure on living standards here. Whether Australians have benefited from the easy flow of people across the Tasman is more arguable. There are reasonable arguments (and, thus, models) for small gains, small losses, and not much difference at all.

Even within the context of a system of immigration controls, there can be a variety of motives for allowing immigration. There is the humanitarian perspective that governs refugee policy. We don’t take refugees because it is good for us, but because it is good for them – people whose homelands have become impossibly difficult. If the refugee intake ends up benefiting us economically that is a bonus, but it isn’t – or shouldn’t be – what drives us. And, of course, we allow New Zealanders who marry abroad to bring their spouse home, and to become a New Zealander. Again, there isn’t an economic motivation behind those provisions. And some countries have real problems controlling their borders, and get stuck with people they never intended to allow in.

But we do control our borders and the bulk of New Zealand’s non-citizen immigration programme has an economic focus. MBIE, and the government, have described the immigration programme as a “critical economic enabler” for New Zealand – a phrase which sounds sillier, and emptier, each time I write it, but which is at least honest. We take migrants – lots of them (three times the per capita inflow in the US) – on the hypothesis that doing so will help New Zealanders economically over the medium to long-term. We certainly needed “critical economic enablers”, so poor has our economic performance been over the post World War Two decades. And there are plausible hypotheses for how immigration can help, at least in the abstract.

But several decades on, surely the advocates, administrators, and cheer leaders of the programme should be able to point to economic gains for New Zealanders? It doesn’t seem an unreasonable request, given the economics-based case made for the programme. The presence of a wider range of ethnic restaurants, or the success of the All Blacks, are all very interesting – although, to be honest, I hadn’t seen too many new English restaurants (the UK is still the source of more new residents than any other country) – but that isn’t the case that has been made. New Zealanders are supposed to have been made better off economically by large scale immigration. And if there is evidence of those gains, the champions of the programme are strangely reluctant to cite it.

Australians have been panicking about immigrants and to some extent their loss has been our gain.

Migration-driven GDP growth through a period of commodity price downturn has been a timely break for our economy.

….

There are risks that high immigration disenfranchises those at the bottom of the social ladder.

We need to ensure we have social policy to protect people from losing out and turning their anger towards migrants. We need to remember the current surge is not driven just by the more highly visible arrivals of different culture and ethnicity.

It is being driven by New Zealand passport holders.

History tells us this wave will not last. And that when it passes it will have left this country richer and stronger.

It is a strange argument. After all, had the economy of our largest trading partner been doing better, presumably that would have helped our economy not hurt it. And if demand had been weak here – as actually it has been – we could have had lower interest rates and a lower exchange rate, the latter in particular would likely to have been helpful.

And then, apparently confusing the variability in the NZ citizen immigration with the baseline large inflow of non-citizen migrants, he worries about people at the bottom “losing out”. But this appears to be only about perceptions because he knows that when the current immigration surge ends “it will have left this country richer and stronger”. That is, certainly, the logic behind the immigration programme. But where is the evidence? There is no sign that the income or productivity gaps between New Zealand and Australia are closing. They haven’t closed after the previous waves of immigration either. It seems to be based on little more than a wish – and that same underlying belief that somehow high immigration is a “good thing”.

The Prime Minister on Q&A yesterday was no better. Corin Dann put to the Prime Minister the case recently made by leading businessman (and economist) Kerry McDonald that high rates of immigration to New Zealand are quite damaging. The Prime Minister responded that he “didn’t think the evidence bears that out”. But he offered no evidence at all. He mentioned wage increases in New Zealand, but when the interviewer pointed out that there was still a very large gap to Australia, all the Prime Minister could offer was the defensive “well, we’ve trying to close that gap for a long time” (really?) and “most New Zealanders would say we are making some progress”. If the numbers supported his case, presumably he’d have quoted them. They just don’t. As I illustrated on Saturday, the gaps to Australia have just continued to widen – not by large amounts in any one years, but little by little. There is still a net outflow of New Zealanders to Australia, and if it isn’t as large as it was that seems to be mostly because the Australian labour market is tougher than it was, rather than that New Zealand is doing well. (Again, as I illustrated on Saturday, both New Zealand and Australia have relatively high unemployment rates at present, and the gap in our favour is no larger than it was on average over the last couple of decades).

The Prime Minister was challenged on political spin in the interview, and he acknowledged that both governments and oppositions do it. It was certainly on display in the answers on immigration. The Prime Minister likes strong immigration because it is a “vote of confidence in New Zealand”. Which might sound good for the first five seconds, until one remembers that for New Zealanders not leaving it is mostly that Australia isn’t doing that well either right now, and for those coming from emerging countries, New Zealand is richer than, say, India, China or the Philippines. None of that tells one anything about whether New Zealanders are gaining from the large scale programme. Similarly, the PM fell back on the “house prices are a quality problem” type of argument – suggesting that Auckland was no different than cities around the advanced world with population pressures. Perhaps he could check out Atlanta and Houston some time.

In a serious interview, on a major issue, the Prime Minister was simply unable to offer any evidence – or even good arguments – for how New Zealanders were actually benefiting from the immigration programme that he continues to run (the same programme his predecessors ran). It should be a clue that there just aren’t such benefits. With all the resources of the state at his disposal, including state-funded research programmes for advocates of the current policy, and he can’t articulate the benefits for New Zealanders. Something seems wrong.

This week’s Listener – house journal for the left-liberal establishment – had a lot of advocacy material on (the perils and woes of) Brexit – epitomized perhaps in the column of the Otago university professor who concluded

Enough is enough. The British Government must halt its plans to proceed with Brexit and organize a second legally binding referendum to determine Britain’s future relations with the EU.

Vote again – and again – until the people deliver the approved answer.

Political columnist Jane Clifton dealt with immigration issue. She observed

But the bitterest Brexit realisation is the damage that ensues when governments fail to “sell” immigration. That’s the most urgent lesson for our MPs to swat up, because anti-immigrant sentiment is seldom far from the surface here. A sizeable bloc of British voterdom simply does not believe that immigrants enrich their country and stoke economic growth and job opportunities. And who can blame them, since in many long-term depressed areas, there’s precious little evidence of it.

Here, immigrants are increasingly copping referred anxiety about Auckland’s growing pains. Rather than document and illustrate the benefits of migration, the Government simply refuses to engage on any other level than to call the anxious xenophobic or racist

I’m not sure that last phrase is correct. So far, to the extent there has been a discussion, it has mostly been free of that sort of thing. [UPDATE: That was before I saw these comments from the Minister of Immigration.] But the more general point holds. The government simply does not, and perhaps cannot, illustrate the benefits of the programme for New Zealanders as a whole. The alternative approach seems to be instead to whistle to keep spirits up, and attempt to spin the problems into a story of some sort of success. If there really is now a robust case to be made for current policy, it should be beneath our government to rely on such feeble assertions. Clifton herself, of course, seems unable to recognise the possibility that there may not be such benefits to New Zealanders – that it might just be an economic experiment that has failed.

These days, we have serious figures from the centre-right, such as Don Brash and Kerry McDonald, arguing that our immigration policy is flawed, and probably damaging to the fortunes of New Zealanders, but our media and political elites remain enthralled with an “immigration is a good thing” mentality, unwilling or unable to engage with the specifics of New Zealand’s circumstances, location, and general ongoing economic underperformance.

And it carries across to housing policy. In the last week, there have been a couple of serious contributions to the debate as to “what should be done” about housing, from, Eric Crampton and Arthur Grimes (and here). I agree with a fair amount of Crampton’s piece, and disagree with a fair amount of Grimes’s – which is notable for wanting to ride roughshod over the rights and interests or existing residents. But where they unite – from the left-liberal end of the spectrum and the libertarian end – is in avoiding any serious discussion about the high baseline target rate of immigration. Now, I’ve always argued that as a first best we should try to sort of our housing supply issues – Atlanta and Houston have – and ideally have a separate conversation about immigration (since my arguments about the damage immigration policy seems to be doing are not at all reliant on house price stories). And if there were any evidence that rapid inward migration was in fact boosting the fortunes of New Zealanders as a whole that might be a particularly robust case. But…..there is none, or certainly none that the advocates have advanced. Instead, we know that Auckland’s GDP per capita has been falling relative to that in the rest of the country for 15 years (as far back as the data go) and the margin by which GDP per capita in Auckland exceeds that in the rest of the country is now very low by international standards. And if there is no sign that rapid immigration-driven population growth is helping lift New Zealanders’ income, while the political difficulties of fixing housing supply remain large, the case for cutting back the target inflow is strong. Doing so would immediately ease house price pressures – and without riding roughshod over property rights through use of compulsory acquisition powers that the government and economists now seem to favour – and at worst not harm our medium-term income prospects.

As a reminder, the OECD produced new data only last week suggesting that the skill levels of adults in New Zealand are among the very highest anywhere (and that, as in most advanced countries, the skill levels of the average immigrant are a bit lower than those of the native-born. To the extent we’ve managed to grow our exports – the foundation of long-term prosperity – it has mostly been in natural resource based industries (complemented by the heavily subsidized film industry and the subsidized export education industry) where numbers of people just don’t help much, if at all. There is no compelling economic case – and recall it is economics that supposedly drives our immigration policy – for using policy to deliver lots more people to New Zealand. The Prime Minister, the leader of the Opposition, the Greens leaders all seem to disagree, as do the media establishment, but none of them can offer a clear simple straightforward data-driven explanation for why.

I’m not sure if there is a risk of a serious social/political backlash of the sort senior lawyer and former ACT MP Stephen Franks talks of. But I certainly hope there is an economic backlash before too long. The alternative is, most likely, that our long slow relative decline continues – and any other decent policies we adopt, and the skills and capabilities that our people possess, are constantly battling up hill, in face of an ideology (no doubt mostly well-intentioned) convinced that “immigration is a ‘good thing’ for New Zealand”. In economic terms it doesn’t seem to have been so for a long time.

In a Listener article a few weeks ago, my former colleague (and New Zealand historian) Matthew Wright was writing about the early pre-1769 history of New Zealand. One line in particular caught my eye:

New Zealand was the last large habitable land mass on Earth reached by humanity. The long journey of our species from Africa’s Rift Valley into the wider world ended, it seems, on the Wairau Bar.

New Zealand has produced pretty good living standards, at such great distance, for a small number of people. In the halcyon days – when our relative performance was at its best – we had a quarter the population we now have. New Zealanders saw something going wrong decades ago and started leaving in large numbers – in outflows that, as a share of the population, are really large by past international standards – and haven’t yet seen fit to reverse that judgements. Distance isn’t dead, but our government’s immigration policy – in thrall to the ideology – seems to assume that wishing it so can make it so. We need to be much more cautious, and evidence/experience driven, in continuing to pursue an economic case for an ever-larger population

30 thoughts on “Immigration is “a good thing”, and that is all we need to know”

Can’t vouch for the veracity of this comment as didn’t witness it first hand – but if valid you can add this to your list of chefs and café attendants – we don’t seem to be able to produce tour guides to run visitors around the country

Patrick Gower on Q&A confronts the PM with the figure of 5917 tour guides granted residency. It is presumed that was for one year. John Key said “oh well it’s a $32B industry and people are crying out for staff in Queenstown. Once they gain residency they can drive buses

someone else raised this with me directly. According to the transcript it was “work visas” not residency approvals, and when I checked the MBIE numbers I had no idea where Gower was coming from (they showed just over 2000 in 2015/16). HIgh but, as someone pointed out, tour party escorts need a short-term visa to work here, and I don’t have a problem in principle with say Chinese tour parties having a Chinese escort.

What I had in mind is that people from a quite different culture, holidaying here for the first time, might quite reasonably want an escort who understand their culture/language etc.

I have no idea what proportion of the “tour guide” work visas are for this sort of role, but to this extent I don’t have a problem with granting such visas. In general, as you know, I’m skeptical of the way the work visa system is being run, but it isn’t entirely a bad system.

(perhaps you could refer your unease at my accommodationist views to my other commenter who is convinced I am totally one-eyed on all immigration issues?!)

I have a problem with labelling migrants as the primary contributor to NZ productivity woes. This in essence smacks of a serious migrant bias in your analysis. Migrants are usually hardworking and a highly productive sector as they start with nothing and have to save and earn and build their wealth leaving friends and relatives behind to start a new life.

But our economists analysis of migrants and Statistics NZ inclusion of foreign workers, international students , returning kiwis and long stay tourists in the definition of permanent and long term migrants just help to muddy the waters in terms of what actions are necessary.

If you can’t properly identify the cause of the problem then you are very simply not going to fix the problem.

Real migrants represent only 14k arrivals a year. That number has been static for the last 15 plus years. The government aims for 50k residence approvals which means 36k get selected from foreign workers and international students already here. Population statistics indicate migrant numbers is largely replacement. 50k looks about right once we take in churn rate. We want to try and keep the best and brightest foreign students so we offer them residency after all we trained them. It just makes sense to try and keep them here as long and contributing to our intellectual capital. But the churn rate is high. They have big careers in their home countries. Most we will keep no more than 3 to 5 years before our small population and small businesses start to crimp on their own personal growth and personal wealth opportunities.

This same principle applies to foreign workers. The churn rate is extremely high.

Replacement in any normal persons context is not high and population statistics indicate that migrants is mainly replacement averaging around a net population increase around 8k a year. Real NZ Population growth is largely at the rate of natural birth ie the difference between births and deaths.

But yes overall population is increasing and that is largely due to more temporary factors with an even greater churn rate but nevertheless a major contributor to population growth, year in and year out increments in international students each year which now number around 120k a year and international tourists that now number 3.2 million, an increase of 400k this year with a target of 4 million which is an increase of 1.2 million from the 2.8 million tourist arrivals just a year ago. You cannot simply ignore the numbers because they are people and not just numbers on a page. They need a place to stay. They buy NZ dollars to the tune of $14 billion a year to spend in NZ.

I generally prefer fixing housing markets so that they can be responsive to whatever levels of immigration are decided on. I also worry that setting immigration policy to respond to housing, rather than vice versa, means we can never revisit either housing or immigration: housing would remain locked by NIMBYs, and immigration would then also be so-locked. And, that other cities in other places have managed to maintain affordability despite huge population increases suggests that elastic supply curves can cope with demand shocks.

Yes, I have some sympathy with that perspective, although I remain a bit skeptical that housing supply can be fixed – technically it can, but politically perhaps not. I’m still looking for the first case study of a city that successfully unwound the morass of controls etc once they were in place (never having put them on would of course be much more sensible, but sadly we aren’t starting from there).

Even though I agree it is hard to come up with an example for you, I am slightly more optimistic on the political front than you are. I think the free-up-land-use side has made enormous strides on the rhetorical side of the argument in recent years, and that such large shifts in the rhetorical landscape sometimes presage policy shifts. Further I think that the electorate has been slow to cotton on that current high house prices are an outrage, partly because >50% of voters still own their own homes. But the number of people who think house prices is a problem is slowly growing. Finally, there is an inkling, most developed in New Zealand, that politicians at central government level will begin to put reform pressure on local governments, because they realise land is turning into a national productivity issue. On balance, it wouldn’t surprise me if at least one English -speaking city announces a reform within five years.

I really hope you are right altho (a) those aren’t great odds (50% chance that one of Sydney, Melbourne, Auckland, Wellington, Vancouver, Toronto, London, San Francisco, New York, LA, San Jose “announces” – as distinct from makes real – reform), and (b) see my comments on Graeme’s post, on the nature of govt policy changes here to date. I think it is much more likely that the point of least resistance in NZ will be a state building programme, with some National Development Act type powers to temporarily override planning and related laws. That might fix the symptoms for a few years, but isn’t real sustainable long-term reform. A package of, say, lower immigration and aggressive state building sounds easier to sell electorally than the real reform options.

Hi Michael one city which removed a lot of its planning controls is Houston in the way it allowed building up within its inner motorway ring suburbs after 1999 and for the whole city more recently. Relaxing density restrictions by half, along with reforming a whole lot of setback type requirements. Of course, Houston is famous for its lack of zoning to build outwards and it doesn’t have issues with affordable housing -with all its political implications -but still, I am sure they have some NIMBYs to fight off.

Thanks for those links Brendon. Sounds like an interesting liberalization case study, although with the important caveat that it happened when house prices (and price to income ratios) are already low.

Brennan, Houston has a 3000skm highrise core compared to Auckland’s highrise core of 500 skm in the harbour. Houston land liberalisation would not work in Auckland because there is a 30 km to 40km low rise gap between Auckland Harbour to the mini high rise of New Lynn, Manukau and Albany. Houston has 10,000 skm with 6.2 million people. Auckland is already spread from Leigh in the north to Pukekohe in the south of 5000 skm. HALF THE LAND MASS OF Houston with only 1.5 million people and we are full. Our trave distance is 129km compared to the Woodlands in the north to Texas city in the south, travel distance is 118km, ie shorter travel than Auckland. It is not about land. It is about increasing the highrise central core. MT Eden, Mt Roskill, Epsom, Remuera, Mission Bay must be at least 18 level towers otherwise infrastructure costs to link the cities Manukau, Albany and New Lynn is just far too high and too expensive for a tiny 1.5 million people to afford.

Perhaps there is a unique chance to fix future form of Auckland and the regulatory environment (land use, building act, road designations) while the problem of Auckland house prices is so bad? Immigration fuels this for sure but without the people living in cars would the political will be there to make the change?

possibly, but it sounds a pretty callous approach, and you would have to wonder how enduring any regulatory settlement forged under that sort of emotional duress would prove to be. People only get to live their life once and it isn’t that obvious that there is a sustainable regulatory solution yet in the works.

If I recall correctly, the last three National party conferences featured:

(a) additional subsidies to first home buyers (opposed by officials – who know these things go straight into higher prices
(b) additional points for people with job offers in the provinces, thus guaranteeing that we slightly debase the skill level of the average accepted migrant, and
(c) a $1bn loan fund to councils, interest-free. This was the party that campaigned against interest-free loans to students (rightly in my view). Only consolation is that interest rates are so low at present.

Yes, perhaps there is some fundamental first-principles stuff going on, but the draft National Policy Statement didn’t fill me with any confidence, nor does the rediscovered enthusiasm for confiscation of privatr property (so successful, and just, it was in Chch).

Again, I am dismayed, but no longer surprised, at your largely one-track mindset and obsessive approach to immigration. You label anyone who disagrees with your views as ‘elites’ (which has to be one of the most idiotic and misleading appelations in vogue at present). And you label those who side with your views as ‘serious minded’, with the inference to be drawn that those on the other side of the fence are frivolous or feeble in mind. That kind of mindset would go down well with the appalling arrogance of the Michael Goves of this world and others of his ilk. A ‘serious-minded’ approach to any arguments should not involve invoking labels and then mindlessly categorizing people into the labels.

I share some of your reservations about the current and recent quantum of immigration (but only to a limited degree), and see benefit in a review of the skills tests applied to some categories of imigration. An intelligent, well-informed review of immigration policy and its benefits and costs would indeed be timely. However, in such a review, the arguments against immigration would need to be far more robust and evidence-based than I have yet to see in your posts. I do not find any of your arguments that immigration is a major cause of our economic under-performance at all persuasive. Rather, your arguments are advanced from the perspective of someone who has already made up his mind on the matter; someone whose ‘priors’ are so cemented in that no counter-arguments stand a chance of a fair hearing. Rather like a kangaroo court, where you sit in judgement of the defendant, having scribbled ‘guilty’ on a piece of paper long before he or she has even entered the court room. In keeping with this approach, you shake off the arguments of anyone who offers different views, much like a dog shaking off water after the rain. You show no more inclination to intelligently consider the issues in a truly objective manner than those on the other side of the fence with equally strong priors, and yet you present yourself as being an objective (and doubtless a ‘serious-minded’) interlocutor. Your words so often reek of arrogance and condescension. In so doing, the way you expess your views merely polarizes the debate and causes the so-called ‘elites’ to apply the same filter to your arguments as you do to theirs.

An intelligent and unbiased discussion of immigration policy would involve (among other matters):

– dropping the ‘priors’;
– abandoning the arrogance;
– opening one’s mind to the various arguments on the issue, unshackled from the knee-jerk tendency to immediately dismantle any argument that does not sit comfortably with one’s own position or perspective;
– clearly separating the economic benefits and costs of immigration from the social and other benefits and costs, and recognising that immigration needs to be assessed across many categories of criteria;
– dropping the emotional bias to the preservation of an anglo-saxon/celtic culture (which, I must say, comes through so strongly in many of your posts on the immigration issue);
– assessing the economic benefits and costs, both in the short term and medium to longer term (factoring in potential benefits of scale economies that might arise from having a higher population than would be the case if we were to lower the immigration target);
– assessing the evidence of skill shortages across the different industries, based on survey data, and assessing the extent to which such skill gaps could realistically be addressed through training of existing residents and through an increase in labour prices).

I read several reports recently, some published in 2013, which summarized employer survey data on skill shortages. These reports compared NZ to many other countries and revealed much higher skill shortages in recent years than in most other countries surveyed. I very much doubt that a wage increase and/or training would be sufficient to address this issue. As an example, higher wages paid to aged care nurses would not necessarily induce people currently on the dole or those who have given up looking for work to seek a career in that vocational field; aptitude, suitability and experience are more likely to be the key drivers. Much the same might apply in other industries where there has been high immigration. More research would be needed to answer that.

In short, intelligently framed answers to the immigration question do not lie in rants and raves, in rigid adherence to priors, in cultural bias, in labels, in the selective use of evidence, or in the confused muddle of cause and correlation. Insightful answers are much more likely to arise from a well-reasoned, fact-based and open-minded discussion. Sadly, I see little of the latter in your blog and much of the former.

If you really want to promote an intelligent discussion on this issue and to have a positive influence on immigration policy, I suggest you change your approach.

I’m not sure where you got your “serious-minded” point from. Glancing thru the post, I can’t see it. What I did see was a description of Don Brash and Kerry McDonald as “serious figures” (which I don’t think anyone would dispute) and contributions on housing by Eric Crampton and Arthur Grimes as “serious” – even as I go on to note an area where I disagree with them.

I won’t try to respond to the rest of your (fairly de haut en bas) comments, except perhaps to note that my views in this area have evolved considerably over the 6 years or so since I started thinking about it seriously, and that – despite today’s attack on him in the Telegraph – I would proud to be compared with Michael Gove, someone who has brought about serious and worthwhile reforms in several portfolios, writes thoughtfully, and helped lead a successful fight to return powers – over all sorts of things – back to national Parliaments. Whenever I read his articles I wish that we had politicians of such substance in New Zealand.

The problem with not factoring in churn rate is that you are not measuring properly the incomes and the experience of new migrants. Migrants that do stay end up doing better than the average anecdotally. When international students and foreign workers taking up residency they leave in large numbers as careers in their home countries tries can be much more lucrative in terms of the job positions and the money value. They get their work experience and then they move out of NZ.

Statistics only measures the ones here and not the migrants that have left. As the churn rate is high you would expect lower incomes for new migrants as you are always measuring the newbies and as a result your analysis is dramatically incorrect.

How you, or anyone for that matter, could wish to be compared with Michael Gove is beyond me – unless you aspire to half-baked reforms (for which he became renowned in the education portfolio), duplicity (a la his recent leadership manipulations), appalling arrogance, and leading the UK into a state of completely unnecessary turmoil (which will, in all likelihood, last many years, at great cost to jobs and growth). I just hope that the Conservatives have the good sense to appoint May rather than Gove as their leader.

Ah yes but then I think Brexit was a brave (and correct) choice, probably in any case a precursor to the dissolution of the EU and the euro.

And I think the school choice model, and emphasis on a solid history base in the curriculum, were both excellent steps forward. The latter might, arguably, not be something ministers should be deciding, but then as one experiencing our own national curriculum daily, through my kids’ experience, I can only wish for that sort of input in what is taught here.

Appoint May.
A [deleted] Helen Clark clone, control freak and a remain supporter.
Says it all.

If the conservatives appoint her as PM they will have a riot in the house.And rightly so.

Mr Mortlock.
Given that you have just said “Insightful answers are much more likely to arise from a well-reasoned, fact-based and open-minded discussion.” Where is you contribution?.
If you had any statistical and cogent arguments that challenge our host then perhaps you could favour the rest of us with the detail instead of simply berating our host for having putting forward his detailed analysis that forms his opinions and helps to inform the rest of us.

Mr Mortlock (above) states that debate needs to “separat[e] the economic benefits and costs of immigration from the social and other benefits and costs, and recognising that immigration needs to be assessed across many categories of criteria” . I believe that is exactly what Michael is doing by focusing on the economic benefits and costs, as these are the main quantitative measures we have. Social benefits and costs are largely qualitative measures and assessing such is a rather subjective exercise.

Thank you for the absence of ad hominem in your helpful comment Peter.

I have plenty to do (unlike some on here, I suspect!). Alas, I should not allow myself to get distracted by these kinds of blogs. And there is plenty of polemic and ad hominem on here without my adding to it!! Indeed, my contribution was largely in reaction to that. (That is not to say that there aren’t plenty of solid arguments on various topics as well. I readily acknowledge that there are, and I very much commend Michael on that. Monetary policy, central bank governance and accountability, etc are among them.)

On the immigration issue, all I would add to my earlier commentary is that a helpful way to evaluate the economic benefits/costs of immigration is to assess the skills gap (as from the data accessible via various employer surveys) and then consider the extent to which such gaps could be adequately filled through enhanced training and/or a price response (ie higher wages in the relevant sectors). Based on the survey data I have seen, there is a reasonable body of evidence to suggest that are substantial skills gaps in various sectors. One paper I read last week (published in 2013) indicated that NZ had one of the highest measures of skills gaps across a range of sectors of the many countries included in the survey. My contention is that it seems (to me at least) implausible that these skills gaps could be adequately addressed by training, price responses, etc in the timeframe needed to avoid foregone economic activity. Hence, immigration fills the gap. (That is not to say that the present quantum is necessarily justified – a point I made in my earlier comment. More analysis is needed on that. Equally, though, an arbitrary reduction in immigration levels (as has been suggested) is not likely to be the correct response. Rather, the (non-NZer) immigration level should, presumably, be permitted to fluctuate in line with identified skills gaps.

I think sometimes an economic analysis doesn’t quite tell the whole picture about immigration. I don’t doubt your figures about NZ’s gradual economic decline, especially in productivity, but I think you make assumptions about the nature of migrants – both to and from NZ – that are not necessarily accurate. There is a belief that NZers who leave are always the brightest and best, and that those who seek to come are desperate or are of dubious ability. Migrants are usually highly motivated. I think Theresa May let the cat out of the bag when she complained that African ‘refugees’ were nothing other than ‘economic migrants’, as though that were a bad thing.

What shocks me is how many migrants are underemployed in NZ. As a migrant from the UK, I have not struggled to adapt and succeed, but anecdotal though it may be, I have lost count of the number of migrants from non-English speaking countries who have degrees and the like but who are working as cleaners or taxi drivers etc, or the guy I knew with the MBA in the public service who hit a glass ceiling well below his capabilities early on and ended up decamping to Australia.

In short, I am saying that a country’s productivity is surely reflective of how well it utilises its citizens’ talents (whether native or migrant), and that if we have underemployment of migrants we are exacerbating this. Of course, one response to this point that an immigration-sceptic could make is that if NZ employers (private and public) do discriminate against migrants, then we should have fewer immigrants. That saddens me, but given the growing tide against migration in global politics, perhaps that mindset cannot be changed.

You are a experienced migrant and you are gainfully employed. I too am a migrant and also gainfully employed. The migrants that have remained in NZ are usually above average in terms wages. When you refer to how surprised that many migrants are unemployed is due to the ignorance of churn rate, ie many new migrants do not stay. They leave NZ for greener pastures. There is no logic in staying if you have no jobs. There is therefore a high churn rate ie statistics is not measuring the same group each year. More than likely statistics is measuring a new replacement group.

Yes, I agree that economics isn’t the only criterion against which to judge immigration (or any other) policy. I’ve tried to focus on the economic dimension mostly because economics is the ground the current policy has largely been sold on. In a sense I think that is the point of May’s comment – we see people we class as “refugees” differently from “other migrants”, and I think reasonably so. For refugees in particular, we don’t mainly ask “what’s in it for us”. Of course, there is an argument that we should allow lots of “economic migrants” in just because they will be better off here than at home, but personally I don’t think that is a sensible, robust, or enduring basis for decisionmaking in a democratic society.

Underemployment and skill mismatches can be a real issue, as you say. It is partly why immigrant earnings – other than UK migrants in particular – tend to lag behind those of natives, even for comparable paper qualifications. Of course, those OECD results were looking at generic skills, and so if there were only a mismatch issues one might expect to see skill levels matching those of natives, but earnings lagging.

The overall story around immigration is a complex one, and there is wide variety of people who arrive – different skills, different backgrounds, different motivations etc. My main interest is the overall NZ economic performance story, and there I’m not convinced our immigration policies have been helpful for a long time now. And that goes back to the days post WW2 when the overwhelming bulk of our migrants were from the UK – on my story, the major economic forces relevant to NZ immigration are totally unrelated to the race, ethnicity, religion or whatever of the migrants.

Hi Geof
You might try reading some analysis in this area.
For a review of some of the pro-immigration analysis see my paper on the arguments for super Diversity by Mai Chen. ‘The Superdiversity Myth’ available at tailrisk.co.nz. Michael has referenced it an earlier post.
Word of warning, it may be a tad arrogant for your taste.
Cheers – must get back to work

Thanks Ian. Yes, I suspect it would be on the arrogant side, given your past form! 🙂 But I will take a look anyway when I have a dull moment and am in need of enlightenment and entertainment.

More seriously, I think the productive avenue for enquiry (or one of them at least) lies in my point about evaluating skill shortages and assessing what the alternative growth track (per capita) would have been in the absence of immigration as the means by which the skills gaps can be closed. That part of the analysis seems to be missing in the debate to date. I suspect that in the absence of immigration to meet skills gaps, the growth track would have been lower in per capita terms due to delayed or foregone economic activity.

I am not arguing for the current immigration target. But I am suggesting that an arbitrary target (including a reduced one) is not the right response; the level of immigration should be demand driven on the NZ side, based on proven skills gaps and the inability to fills the gaps by training or wage rate increases.

Must get back to my work – and leave you to your modelling. (Don’t let the real world get in the way of your model parameters and assumptions though Ian. :)) Best wishes.

Immigration is not a complex issue. It is the very foundation of New Zealand. We have a large land mass devoid of people. If you want economies of scale then you need more people. People generate economic activity. Without people you have no economic activity. If we are losing population it means that we do not have sufficient scale to keep people. It is human nature to strive and to achieve more. Career people need corporate ladders to climb. Entrepreneurs need a market to sell to. No point being innovative to sell a fantastic product to a country full of sheep and devoid of people. And that is why we keep losing our young to overseas cities.